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Alphabet (GOOGL) stock forecast for 2025: Where next for the technology giant?

By Rob Griffin

Edited by Jekaterina Drozdovica

15:36, 6 December 2021

April 25, 2019, Brazil. Alphabet logo on your mobile device. Alphabet is a holding company and a conglomerate that owns several companies that were owned or linked to Google.
Alphabet (GOOGL) stock forecast for 2025: Where next for the technology giant? – Photo: Shutterstock

Alphabet may not be an instantly recognisable name, but it’s the world’s third largest company with a market capitalisation of $1.99tn.

The US technology conglomerate was created six years ago when Google was restructured to enable its various business interests to be managed more independently. While such a corporate shake-up is relatively unusual, it’s typical of the unorthodox approach taken by Larry Page and Sergey Brin, who co-founded the Google search engine in the late 1990s.

In fact, the very first founders’ letter they wrote in 2004 made their intentions clear. “Google is not a conventional company,” it stated. “We do not intend to become one.” 

ALPHABET STOCK PRICE FORECAST

No-one can deny that it’s been successful. The stock has risen over 5,000% since its IPO in 2004 to $2,847 (as of 6 December).

So, what are Alphabet’s prospects over the next five years? Innovation in technology as well as regulatory hurdles may be the defining factors that shape the Alphabet stock price in 2025.

Alphabet stock price chart, 2016-2021

Alphabet stock analysis: What businesses make up the company?

The most logical place to start is by taking a look at the various companies that come under the Alphabet umbrella.

The main one is Google. This remains Alphabet’s largest business and is reported as two segments: Google Services and Google Cloud. Alphabet’s non-Google interests are collectively known as Other Bets. They include emerging businesses at various stages of development and operate as independent companies.

Google Services includes Android, Chrome, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search and YouTube.

“Working with content creators and partners, we continue to build new ways for people around the world to find great digital content,” the tech giant said in a filing to the US Securities and Exchange Commission (SEC).

Google Cloud, meanwhile, has seen continued investment within areas such as infrastructure, security, data management, analytics and artificial intelligence.

“Because more and more of today’s great digital experiences are being built in the cloud, our Google Cloud products help businesses of all sizes take advantage of the latest technology advances to operate more efficiently,” Alphabet added.

Revenues rose sharply in the third quarter

Alphabet recently reported a 41% increase in revenues to $65.1bn for the third quarter ended 30 September 2021 – up from $46.17bn in the corresponding period last year. It also said operating income had risen 32% year-on-year from $11.2bn to $21bn, while net income was up almost 28% to $18.9bn.

In a statement accompanying the results, Sundar Pichai, chief executive of Alphabet and Google, recalled how he’d laid out the vision to become an AI-first company five years ago.

“This quarter’s results show how our investments there are enabling us to build more helpful products for people and our partners,” he said.

Pichai cited ongoing improvements to Search and the new Pixel 6 as examples.

“As the digital transformation and shift to hybrid work continue, our Cloud services are helping organizations collaborate and stay secure,” he added.

Longer term growth plans

In an earnings call with analysts, Pichai outlined some of the priorities he sees for the company over the next three to five years, which may be defining for the Alphabet long-term stock forecast.

“You will continue to see us undertake deep technology investments,” he said. “Beyond that horizon, that’s why we are thinking even about areas like quantum computing and so on.”

Philipp Schindler, the company’s chief business officer, highlighted how it was helping advertisers tap into content being made available on YouTube.

“We’re really encouraged by the long-term opportunity in commerce – and we’re laser-focused on helping businesses of all sizes connect with their customers wherever they are,” he said.

Alphabet (GOOGL) stock forecast for 2025

Algorithmic forecasting service Wallet Investor gives a positive Alphabet stock price prediction for 2025. The site sees Alphabet stock more than double over the next five years to $5,798.89 from the current $2,840  price, as of 6 December 2021.

Wallet Investor states the company is a “good long-term, one-year investment”, with the stock predicted to rise to $3,485.25 over the next 12 months.

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It also highlights staging posts for the stock over the next five years, suggesting it could be as high as $4,076.73 by November 2023 and $4,654.23 a year later. By November 2025, it may be at $5,231.31.

However, Wall Street analysts give a more modest Alphabet share price forecast. Based on 31 analysts’ views compiled by MarketBeat, the average Alphabet stock price target for the next twelve months sits at $3,181.39, ranging from a high of $3,600 to a low of $2,525.

The consensus rating on Alphabet is a ‘buy’, with only one analyst recommending a ‘hold’, according to the site.

Alphabet has been rated by Oppenheimer, Piper Sandler, Raymond James and Royal Bank of Canada in the past 90 days.

Chart

Note that predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.

Alphabet stock analysis: What do the experts say?

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, believes Alphabet has benefited from increasing ad revenues generated as economies have recovered.

“This has helped give it the deep pockets to splash cash on projects which might not be earners right now, but could provide significant revenue streams in the future,” Streeter told Capital.com.

She also pointed out Google Cloud revenues are growing fast and the chance of profits being made in this division no longer look distant.

“Its other wagers such as self-drive cars are still way off on the horizon in terms of generating even revenues, but are very capital intensive,” she added.

However, this isn’t seen as a major problem.

“As Alphabet’s cash on hand is piled so high, well over $100bn at the last count, it has the luxury of experimenting with technologies which could eventually be world changing,” she explained.

Of course, there are potential hurdles over the next few years. Streeter highlighted the “significant regulatory risks” associated with the company’s increasing dominance.

“Although new laws are highly unlikely to derail the juggernaut, they could slow its growth path,” she said. “The fact that so many legislators have it in their sights shows how influential the tech giant is.” 

A broker note from Zacks, which rates the stock as ‘outperform’, highlighted a number of reasons for positivity, including its purchase of Fitbit, the wearable fitness company, which has 28m users.

“The acquisition gives Google a bridge to the $3tn health care market,” it stated, pointing out that it can provide “valuable insights” to medical professionals about broader health trends.

It also flagged up the company’s increased appetite in the home assistant space, an area it first entered in 2016 with the launch of Google Home.

It pointed out that the service performs an array of tasks, including playing music, reading books, answering queries and controlling smart home devices.

“As voice is being seen as the next big thing in computer interaction, these products could help Google expand its revenue going forward,” Zacks wrote in a note. 

Doug Anmuth, an analyst at JP Morgan, believes Alphabet’s fundamentals are strong and that it will remain a “primary beneficiary” of the secular shift to online spending.

“Google remains focused on innovation across its advertising businesses, and we continue to believe there is a meaningful runway across search and YouTube ads as return on investment (ROI) improves and TV dollars shift more online,” he wrote in a recent broker note.

He pointed out that non-ad businesses, such as Cloud & Play, have strong momentum.

“We remain confident in the company’s ability to benefit from the ad recovery and generate strong earnings power, while continuing to innovate for the long-term,” he added.

FAQ

Is Alphabet stock a good investment?

Whether Alphabet is a suitable investment depends on your own investment objectives and your own research. It’s important to reach your own conclusion of the company’s prospects and likelihood of achieving analysts’ targets.

Will alphabet stock go up or down?

Technology is clearly a fast-growing area and Alphabet is at the forefront of this industry. Most analysts expect the company’s stock to rise over the next five years – but there are no guarantees when it comes to stock markets. Past performance is no guarantee of future success. And never invest money you cannot afford to lose.

Read more: Zoom (ZM) stock forecast: Bargain opportunity or slippery slope?

Markets in this article

GOOGL
Alphabet Inc - A (Extended Hours)
180.80 USD
-2.79 -1.520%

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